Report Urges Food Stamp Program To Clarify Purchases, Corporate Profits : The SaltWhile Congress debates food stamp cuts, the government should disclose where the program's costs are going and how much retailers and banks are profiting, says a new consumer watchdog report, Food Stamps: Follow The Money.

The public really doesn't know much about what food stamp recipients are buying, and how much companies are profiting.
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The public really doesn't know much about what food stamp recipients are buying, and how much companies are profiting.

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Anthony Smukall's shopping list might look similar to that of many American's: Milk, eggs, whole grain bread, apples, assorted berries. But Smukall buys these products with his monthly SNAP allotment – money he receives from the Supplemental Nutrition Assistance Program (formerly known as food stamps).

"I enrolled in SNAP over a year and half ago, because of a debilitating back injury that has made life difficult," says Smukall of Buffalo, N.Y. "With rent, utilities, and raising a two-year old, coming up with enough money to afford the basics was very hard."

The fact that Smukall buys milk and not Gatorade is the kind of information many people would like to have on all food stamp recipients. But what SNAP participants buy — and how corporations benefit — is information not made available to the public, although it should be, says a report released this week.

"Groups are pitted against each other over whether or not to allow soda purchases with SNAP, for example," says Michele Simon, a food industry watchdog and author of the report, Food Stamps: Follow the Money. "But we don't know how much SNAP money is even being spent on soda. Where is the money going? We just don't know."

The debate over what people buy with SNAP funds came to a head a couple of years ago when New York Mayor Michael Bloomberg sought, and was denied, permission from the USDA to test limiting SNAP purchases of sweetened drinks. (He's since moved on to try to limit soda sizes.) Eight other states have recently tried and failed to make nutritional improvements in the program. Meanwhile, a handful of states have allowed some people to make fast food purchases with their electronic benefit cards (EBTs).

And now, as part of the current debate on the farm bill, Congress is considering large cuts to the SNAP program – to the tune of $90 per month for people like Smukall.

Simon says any changes to the program must come from a real understanding of how the money is used and where it's spent.

Banks and SNAP

One area where more information is needed, Simon says, resides with the banks and similar service providers. Like welfare, unemployment benefits and many military service payments, most states now administer SNAP benefits through EBTs issued by independent contractors, often banks. Fees are typically charged on these cards for each transaction made by users.

The administrative costs are about $314 million nationally, says Simon, although there's no national data on the total value of EBT contracts. And the price tag will continue to rise as more people enroll in the program.

According to USDA data JP Morgan Electronic Financial Services holds 24 such government contracts for SNAP EBT cards nationwide but they and other contractors are not required to produce itemized revenues. They should be, Simon says.

JP Morgan declined to comment for this article.

Retailers and SNAP

Like many Americans, most SNAP participants shop at superstores. USDA data shows that almost 85 percent of SNAP spending was done at superstores and supermarkets. But the USDA doesn't share information about where beneficiaries spend their SNAP dollars and which products they buy.

The Tulsa World recently obtained some revealing data on SNAP purchases in Oklahoma. Its analysis found Walmart stores took in more than $500 million in SNAP spending between July 2009 and March 2010. All SNAP spending in the state for that period was nearly $1.2 billion.

Walmart says this reflects the large number of stores in the state. A spokesman for the company also says that is offering more healthy choices for all customers. He says whole milk, eggs, bananas and tuna top SNAP purchases for the chain, following larger consumer trends toward healthier eating.

Simon says large corporations are entrenched in the system without transparency, when SNAP was originally designed to help farmers. Also, without knowing what sorts of products are being purchased, the public can't evaluate how Walmart and others may play in meeting or obstructing the program's nutrition goals.

The USDA says that under federal law, collecting information about specific retailers and products is illegal (note section Q), but several projects are underway to help the department better analyze SNAP food purchases. These include a survey of participants and a feasibility study on collecting better data through EBT cards.

Recipients like Anthony Smukall say taxpayers should know how and where SNAP money is spent. He says it would be the only way positive changes might be made to the program.

"Transparency is a necessity to make the most of a program that is further facing more deficits and cuts," he says.

With a pinch of skepticism and a dash of fun, The Salt covers food news from the farm to the plate and beyond. You can connect with senior editor and host Maria Godoy via our contact form or directly by email. You can also reach correspondent Allison Aubrey via email.